How PACE Equity Works: A Hospitality Project Case Study
ABOUT THE PROJECT
The developers of a new hotel opted to incorporate PACE Equity funds into the project's capital stack. In doing so, plans for the hotel were moved forward with PACE Equity, while adding negligible construction costs. When construction broke ground in 2016, it marked the first time that a new construction project utilized the Property Assessed Clean Energy (PACE) financial instrument.
PACE Equity contributed $6.8 million to the project, just over 10% of the hotel’s total development costs. PACE Equity worked for a year with energy engineers, the hotel’s architect, and development team throughout the design process to identify key components of the building’s planned infrastructure that could be leveraged to generate energy savings, without driving additional construction cost.
The hotel developers found PACE Equity to be an attractive source of long term funding due to the value it brings as both an investor and identifier of improvements in the hotel design. Specifically, the building owners noted that the following aspects of PACE were especially appealing:
• 10% of total development costs could be funded by PACE Equity, thus reducing outside equity requirements
• 20-year financing term
• Off-balance-sheet financing, which allowed the building owner to preserve borrowing capacity
• No personal guarantee; PACE relies on the value of the collateral and not personal credit
Read more to learn about the financial benefits you could have through PACE.
We Get Hospitality Developers & Owners the Money They Need.
PACE Equity offers unique advantages for hospitality developers because it provides the capital and end-to-end support you need to make your project happen.
PACE Equity is uniquely positioned to help with hospitality projects. Our proven process and experience in hospitality drives success. Here's how:
PACE Equity gets developers and owners the capital needed to fill a gap in funding or replace more expensive funding, pairing with any complex capital stack elements you have.
We're the leader in PACE hospitality projects and we pioneered the first new construction project in hospitality using our proprietary process.
Hospitality developers and owners win with PACE Equity: we provide capital and end-to-end project support with the process so it's simplified and easy.
$300M facility in long term, fixed rate, non-recourse capital for hospitality projects, be it new construction or redevelopment.
Innovative repayment options are available for hospitality.
We can help drive lower costs of building operation without higher construction costs; that's part of the process.
This PACE Equity customer was the first hospitality new construction project in the U.S. to utilize PACE for capital funding. The owners, energy engineers, PACE Equity, and the architect of the hotel worked on the energy modeling of the design to define savings, resulting in a projected 42% savings over baseline.
PACE Equity contributed $6.8 million to the project, just over 10% of the hotel’s total development costs.